Sectra AB (publ) (SECTB) Earnings Call Transcript & Summary

Welcome to Sectra's year-end report presentation with Torbjorn Kronander, CEO; and Jessica Holmquist, CFO. My name is Helena Pettersson, Investor Relations Officer, and I will be the moderator of the Q&A session that we will hold after management presentations. And with that, I hand over to you, Torbjorn.

Thank you very much. So we just had our broking year, so we had an end of the session [indiscernible]. We'll start with the interim highlights from the quarter, then Jessica will talk about financial developments for the full year and the last quarter. Now we'll briefly talk a little bit about the way forward, and then we have the Q&A session. And you can do that via both the chat function, but you can also then e-mail during the presentation. So our business operations, et cetera, repeating for those who are not familiar with us, is Imaging IT, the largest portion, which is now in a huge transition into a Software-as-a-Service business. We have Secure Communications, which has our by far highest growth right now, doing very high-end encryption devices and phones. And then we have Business Innovation, which is a greenhouse of future projects or things that we want to keep out of the ordinary business lines because they're too long term or strategic. A little about the highlights from the quarter. We won again, we were very proud of the happiest customers in the U.S. Large hospitals, which is our prime, but we also won Best in KLAS. And KLAS is an organization in the U.S. that actually does surveys of customers of medical IT systems primarily. They ask, are you happy with the vendor and they have a lot of detailed questions. And Best in KLAS means you have the highest customer satisfaction in the area surveyed. It was begun only being done in the U.S., but now it's done in more regions in the world. And this year, we won a record number of 8 of those from different portions of the world. We also won digital pathology. In digital pathology, they only award won because there's too few installations in the U.S. so far. So that is only for Europe. But the most important for us is large hospitals in the U.S. We also won small hospitals in the U.S., Canada, Middle East, Northern Europe, Southern Europe and digital pathology, as I said. We have a high customer satisfaction, that is a very key part of our growth. We are not a multibillion U.S. dollars company who can afford fighting with the big dragons in marketing and money, but we can fight with customer satisfaction. And that is how we gain our market shares and have happy customers and then growth. We are in a very prominent transition to as-a-service model. We sold licenses upfront for software, still doing in some parts of the world, but in our largest markets, the U.S. and Canada and increasingly U.K., we only sell now as a service model. And the big difference is that initially, you got a large license sale upfront. Now that is flipped over and we sell over time. Long term, it's better for both us and the customers. But short term, there is a strong impact from this change of revenue recognition model. We have a record order intake for the quarter. We'll come back to the figures later. We also have an extensive patent portfolio, et cetera, both in communications and medical, and that resulted in a onetime income for this year. The transmission to as-a-service model is mainly done as a cloud sales. So we sell over the cloud. It's not the same thing though. We do not sell cloud solutions. So that is meaning you have a provider selling over the Internet to many providers. We don't sell that as a license model, but we can sell a transmission as a -- or a service sale to on-prem, which we do sometimes. The cloud recurring revenue is the future, and that is the thing we sell over the cloud and being recurring revenue. That increased by 49%. And now the overall number at SEK 591 million is so large that this percentage growth really is noticeable. Before we had very high growth, but coming from a low number, it did not impact the overall figures very much. Now it's beginning to be seen. Recurring revenue as a whole includes cloud recurring revenue, but it also includes things that we sell on-prem where patient -- where people pay as-a-service or old service revenue, so service support contracts with customers. And that is also increased, but of course, a very large portion of that increase was the cloud recurring revenue, which is part -- then if you sell as-a-service, you don't want to lose these customers, and you want them to stay. And we have a very low churn. That is the percentage that leaves us between different period, different years and it's 0.6% right now. And it's been below 1% for the several years back. Happy customers drives growth. Contract order bookings went up. With happy customers, a lot of other customers want to buy from you. Our contract order bookings, which is the guaranteed ones or contracted levels is up 40% to a very large order intake of SEK 8.7 billion over 12 months. Net sales increased by 9% and the difference there, of course, is attributed to the fact that we sell as-a-service. So recognizing all that contracted order bookings will take time because it's spread out over several years. And the profit per share, which is our main financial goal, increased by 32% to SEK 2.9 per share. Positive nonrecurring effects from patent settlement. We had a patent settlement in Q3, which meant that we actually got a onetime income of SEK 110 million. We try to isolate that in the financial reporting, so we should not measure operational efficiency by a onetime impact. And that these are our financial targets for the group, stability, equity assets, it's a very important figure for us. We are considered one of the most important IT systems of hospitals today and customers do not want to buy that from an unstable provider. They want long term, they want stability and trust. And then our financial stability is important. And the target is to be above 30%. We are at 51% right now, and we have been above -- around 50% over the foreseeable history. Profitability is our second most important target. That is a hygiene factor. Our target is 15%. And you see there is 2 curves there, one with the patent comparison and one just being the normal operations, which we think is more important. Patents are great, but it's still a onetime income. And then we have growth of profit, which actually is our main goal, but it's priority 3. The first one, the hygiene goals. And the third one is the better, the higher we get. And that is EBIT per share over a 5-year period. That should be above 50%. We are clearly above 107% and including the patent, we're almost at 150%. In Secure Communications, which is, as I said, our fastest-growing area right now. We also see an increasing amount of sales as a service, though that is a very small part of what we do in communications. Most of these are payment at delivery. But there are some -- and we had a contract renewal for one of them where we sell security as a service. We see a high demand for Secure Communication products, both because of the tensions in the world, but also because we are now -- we have invested over several years. We have very good products that are very interesting in modern telecommunications environments. And we had the patent that, of course, gave a very positive onetime earnings boost from that settlement. In Business Innovation, our greenhouse, we have orthopedics IT which is one of them, profitable growth, and it is just ticking along a very large portion of our customers in Imaging IT, which is [indiscernible] radiology and diagnostic tools. They also want special tools for orthopedics. So that area is one of the areas where almost there is no license sales anymore. It is 100% recurring revenue in that area right now or very close to 100%. Medical Education. That is kind of a spin-off of our diagnostic tools. The medical field moves very, very fast. So you both need continued learning of medical professionals. But also we need to speed up the training of new nurses and new doctors. And we have very good tools. We can save and present medical images in such environments. That is our most widespread sales. We have it almost all over the world and also in areas where we do not sell the imaging -- the diagnostic imaging parts. And Genomics IT is a new area. That is -- it has a very large interest. We still only have one customer. It's been live for 1 year, but we are in the CAST phase. So we are now -- we will do in the next year, we hope to get a few more of these products, but it will take time before it begins growing really fast. And research, then we have different research activities, both together with customers. We like to do common research products with our big customers, very often university hospitals but we also do things for decision-making and AI going forward. AI will influence the medical area a lot going forward. In digital pathology, example of a thing that we started in business innovation. We also celebrated just now 10 years with digital pathology. And medical is not the fastest of areas. You want it to be a little careful and conservative as a patient. But we are now a leading provider. We estimate we are the biggest digital pathology provider in the world, but it has taken 10 years. It started out as a Business Innovation product, as I said, now a key part of our diagnostic Imaging IT strategy. And we are more and more going forward -- going towards having a few one system solving all imaging needs for a hospital instead of hospitals need to buy a lot of small systems, which they do not like. They want to have as few IT systems as possible. It's also including the cloud offers in Sectra One, which is our kind of common framework for selling cloud solutions as-a-service. You have both radiology, you have pathology, you have all the other ologies in one single contract. Sweden is today world-leading in penetration. Almost all pathology departments in Sweden has begun using digital pathology, not for everything. They still have microscopes, but they use it predominantly for histopathology, mainly associated with cancer diagnosis. So we have a dominant market share in Sweden. Around 4 million cases have been diagnosed with our solution. It's a growth market as most labs are still not digital. And U.S. is lagging behind Europe a little bit in this, the penetration right now is not large. By far, not even 50% of the market is sold. Imaging IT Solutions in general, we have the ongoing transformation to Software-as-a-Service, as I spoke about, heavily influencing both revenue and profits in that area. Right now, we're still in the transition, and we will be in the transition for at least 1 more year, 1 to 2. Cloud recurring revenue in that area, of course, increasing rapidly, 51% up. And we have been winning increasingly larger contracts. With the trust we have of being the highest customer satisfaction that we succeed in getting some very large customers to buy from us and we are now trusted -- one of the few -- very few trusted companies who can provide very large infrastructure. One such order that we are working with right now is all on the Quebec area in Canada, which is all hospitals in the entire province of Quebec. But there are more of those contracts. Many of those contracts, by the way, is not -- we are not able to publish who the buyer is, especially U.S. hospitals are very reluctant to allow us to present the names, so we can only sometimes make anonymous press releases. And I'll leave the word to Jessica.

Thank you. Good morning, and welcome to our call. We have the pleasure of delivering a report that shows solid financial development for the fiscal year that we just ended. And I will -- during this part of the presentation, I will take you through the key financial metrics, and we start with the order intake. Fiscal year contracted order intake is at an all-time high for Sectra, surpassing SEK 8.7 billion, giving us a book-to-bill ratio of 2.7. And the Quebec contract, of course, contributes largely to this number, but we also had a very strong finish to the fiscal year with fourth quarter order intake of SEK 2.9 billion. And behind the SEK 2.9 billion, there is successful contracting in North America, but also in several other markets, confirming demand for our products and services. Net sales for the fiscal year ended at SEK 3.2 billion, equal to a growth rate of 9.3%. And growth is driven by the SaaS transition and increased services, recurring revenue up 20%, cloud recurring revenue up 49%, as you heard from Torbjorn's presentation before. And at the same time, we see a decline in our nonrecurring revenue year-on-year, and this is all in line with our expectations transitioning to a SaaS business. Currency development impacted sales negatively in the period and especially in the fourth quarter with the U.S. dollar, the euro and the British pound weakening against the Swedish krona. And given the currency trends, we foresee a major impact on our -- on sales in the coming year, provided that more than 70% of our sales are generated in foreign currencies. And the fourth quarter sales increased by 1.8%, growth dampened by currency development and less nonrecurring revenue. Plus we also have a very strong comparable quarter from last year. Moving on to sales by operating area. We increased sales in all our operating areas. In Imaging IT, where growth sits with the recurring revenue, the major driver is increased usage and new sites going live. We note that we have a share of recurring revenue of 70% in the past fiscal year. In Secure Communications, sales increased by 11%, and it is driven by the need for further investments in high assurance and encryption solutions and also cybersecurity. Here, we see larger quarterly variation in sales due to the nature of the business being -- where we have a lower share of recurring revenue. Growth by geographic market. We report growth in all our geographic markets, the highest growth in the U.S. in absolute terms. And in rest of Europe and rest of World, the growth is represented by sales in countries such as Germany, Norway and Canada. Our operating profit, excluding the nonrecurring patent settlement, rose by 18% year-on-year to SEK 613 million, of which SEK 199 million pertained to the fourth quarter. We see profit growth in both our major operating areas, whereas we have a decline in our Business Innovation segment. And that is explained by less hardware sale in our medical education business. Our operating profit margin has improved. It strengthened to 18.9% as a result of improved gross margin as well as restrictive increase in operating expenses. And as currency is one of our major financial risks, we point out again that the stronger Swedish krona is expected to impact our financials in the coming year, '25, '26. Imaging IT increased operating profit by 14% and report a margin just above 20%. There's strong development here in the operating profit despite the cost for transitioning to SaaS as well as cost for deployment of the large contracts that we have secured in recent years and that are not yet in full production, generating the full volume of revenue. In Secure Communications, we increased our operating profit by 7%, excluding the patent settlement and report a margin of 15.8%. And we have seen strong development Q1 to Q3, but we did not achieve the historically high levels of the comparable quarter in Q4, and this is due to facing -- that we are facing some delays in product deliveries. The cash flow from our operations is strong. We generated SEK 922 million in the fiscal year, SEK 222 million in the last quarter. And the main drivers behind the cash flow are profit growth, reduction in tied-up capital in current receivables and also the impact from the patent settlement. And considering the cash flow and our overall financial position, et cetera, the Board and our CEO proposed an ordinary dividend of SEK 1.1 per share and an extraordinary dividend of SEK 1 per share for the Annual General Meeting to resolve. And with that, I'm handing over to you.

All right. Thank you. And again, the reason we are not increasing the ordinary dividend this year but proposing an extraordinary dividend is that we are not entirely through in the transition to Software-as-a-Service, and we don't want to raise the ordinary dividend before we're through with that. Our way forward, I would like to -- we have used this slide before. This was an interview with Wayne Gretzky, the best hockey player in the world for many, many years. He was not particularly good in anything, but he was very good at the overall hockey game. And when he was interviewed how he could be so good, he said, "I do not skate to where the puck is. I skate to where the puck is going to be." And that is very important for us to be able to look into the future, what's happening in medicine and digital communications. And we've been good at that. We saw that pathology and radiology need to be in the same back end. And we're still one of the very few companies who has radiology and pathology in the same IT system, in the same solution. So cloud coming very early. We saw also the need for mobile communications, high-level security communication mobility. So this is a real strength of ours. Now we have not always been right, but we have very often been right. And then, "If you see how things are going to move, you need to adapt to them." And this is a quote from Charles Darwin. He did not actually say the strongest of the species drives and proliferate. He said, is the most adaptable. So the species that can adapt to change will adapt and they will thrive and proliferate going forward. In medical IT, the main change right now is that the demographics of the Western world. People live longer and longer and thus get sicker and sicker. We are keeping sick people alive for a much longer time, especially in cancer than before, but they still need health care. In the same time, we have poor fertility in the society. We have fewer and fewer percent of kids being born. That does -- that makes a very difficult equation. We cannot have everyone working in health care. So health care needs to be profoundly more efficient. There is a discussion in all countries. All kinds of things is local. Everyone is blaming their politicians because health care is not available as it used to be and the queues are increasing. But in fact, the main reason is that we have very many old people, and we have fewer young people who can work in health care, not everyone can work in health care. And this creates, of course, a need to handle the age-related diseases. And they are in neurodegenerative disease, cardiovascular disease, oncology disease, cancer disease, musculoskeletal disease and vision. And that is what we are supposed to be or we intend to be very, very good because that is where the demand for the future will be. We also are good, of course, in pediatric imaging as well. But the societal problems that has to be solved, there's no way out of it are these 5 areas. And the ones you see green, we try to do almost everything ourselves. In the blue, we work a little with other applications to solve the problems of the customer. And it's image-related diagnostics, I would say. So -- and genomics, as we define genomics is a part of molecular pathology, which is actually helping pathologists to diagnose by also doing sequencing of, for instance, cancer disease. What we hear from customers all over the world. Typically, we lack medical staff. Our workload is increasing. That's a demographic problem and that people live longer and longer. And it's scaring close to burnout in many countries, mainly, I would say, in the U.S. In the U.S., the burnout risk of physicians is alarmingly high. And of course, if the existing doctor burnout, the remaining ones will have even more to do. So this is a real issue now all over the world. We cannot just increase the number of hours people work. They want to see their families as well or need to see their families as well. So efficiency is super important. Work efficiency, especially that you do not waste your time on unnecessary documents, unnecessary waiting times that you can be effective when you work as a medical physician or medical staff in general. Another thing we hear very often is we have too many IT systems. We have one customer on the West Coast of the U.S., Stanford University, whose CIO told me in a meeting that they have more than 1,000 IT systems, and that's not a super large hospital. 1,000 IT systems is very expensive to handle. It's also high cybersecurity risk. So there's 2 reasons, very high cost based on maintenance, you need to have people who know all these IT systems. But as I said, also cybersecurity risks increase. Having fewer IT systems doing the same thing that many did before is thus very much important. And that's exactly what we do in imaging. We have this overall structure, Sectra One contract, which solves all the imaging need on the hospital, which is a strong argument for us now. Multi-modality imaging is becoming important. And lately, we also integrated diagnostics, which means you use many sources for information before you take a decision what disease it is you're handling. And especially in personalized medicine, which is growing very fast, which means different people get different treatment depending on what you see for the same disease, is -- it depends very much on effective integrated diagnostics. Future AI, which would be increasing rapidly in health care. We use data from different areas, both EMR, lab radiology, pathology, genomics, and you want ideally most of these data to be in as few systems as possible. So you easily can access it for AI and the decisions -- taking decisions. In cybersecurity, we do live in a new digital reality. Everything is computerized, everything is digitized. Very, very dangerous society, and we know that both national states and crooks and criminals are addressing this to try to get both political but also monetary advantages from it, and more or less steal money. We are very well positioned in the very highest range of cybersecurity. We're not doing things in the kind of general antivirus things you can buy over the net. We are providing things of a national strength. And that is not as large a market, but it's a very nice market to be in, very high barriers of entry in that market. And we are growing rapidly over the last years. We also have an extensive research in this area and a lot of patents. Key takeaway from this presentation, quarterly variations, et cetera, are very large. So again, and I've said it before, I said it again, if you want to evaluate Sectra, look at 12 months rolling average. Quarterly it will go up and go down even though that will decrease because of more and more service as a revenue and people get sick also in summers. But we will see the variation by quarter being very large even going forward. Also, as Jessica pointed out, we have a large currency exposure now. And the Swedish krona, we have had a tailwind for many years by Swedish krona being weak. We do see for the next year that the Swedish krona will be much stronger, and that will affect our profitability going forward. The highest priority for the next year for all of Sectra is to get the new customers. We have a fantastic order backlog now. But we don't get paid before they begin to use the system. So that's a difference, when we sold by license, we got all the money upfront. Now it takes time. Like Quebec, it's hundreds of hospitals. And it takes time to do the implementation. And to get the speed up so we can begin to get paid and the customer actually can use the system as early as possible is definitely a mutual interest between us and customers is crucial because then they will begin to pay and then our recurring revenue will take benefits from the large order intake we had over the last years. So I will end up with sort of -- the order of the animations was wrong here. But if you start with the rational strategy and grow market, and we are in 2 major markets: medicine, which has to address the demographic challenges and the problem that people live longer and longer. It will not work in the current framework. Change will be needed and change will be paid for because of an absolute need. And cybersecurity, we have built a very dangerous society. These issues need to be addressed. And as we are now with increasing tensions building, of course, a normal weapon industry, but digital attacks are very important, and we can help in securing from digital attacks as well. So both of these markets will grow, and they will grow because of external pressures. Even if it's a low tide in society, these 2 areas will have to grow. So we're well positioned. Then if you're choosing these markets, if you have happy customers, and in order to have happy customers, you need to have happy employees. We spent quite a lot of that because there is no way you can have happy customers unless you have happy employees. It's felt by the customer. They are to be expensive when you're worth it. We are not selling on price, et cetera. I have a reasonable thick for it and perseverance and are willing to wait for things because both of these markets, the barriers of entry are very high, but it's also slow markets and new things will take time as pathology has shown. Now pathology is substantial in income, but it took 10 years to get there. Then if we fulfill all of the above, shareholders will be happy. But it comes in that order. We are not putting shareholders on the top. We think that shareholders will be very happy, but it needs to -- the other conditions need to be fulfilled before we can do that long term. The next financial events, September 4, we have our 3-month first quarter report of -- they now began new fiscal year. September 9, we have our Annual General Meeting. It will be physical in Linkoping, will not be broadcasted. And on December 12, we have our 6-month report. And then, of course, the normal reporting structure of our quarters will continue in '26. Your feedback is important. We don't do these meetings or this presentation for the sake of ourselves. We do them for you. And if you think we can improve or if we can be more efficient or if we lack information, we can't fix it unless we know about it. So send an e-mail with your suggestions, we can modify and learn and become even better. With that, I thank for the meeting and your time. And then we go over to the questions part.

Thank you, Torbjorn and Jessica. Maybe if you have time to move into the image. I will start with a few questions that I've got via e-mail from analyst, Nikola Kalanoski at ABG. And the first question is, you signed contracts with a cancer center and the multisite U.S. health system, and these contracts seem to include additional meaningful module sales. I have 2 questions on this. The first is, do new clients increasingly order other modules than radiology on the first contract signing?

Yes. It's a big strength of ours. If you go back 5 years, a lot of customers order like radiology only, pathology only. But now the IT departments are more and more involved and they want fewer systems, as I said before. They want as few possibles as possible to solve the problems, the clinical needs. And we have several orders of multi-ologies that we call, that typically begin with radiology, roll out radiology, pathology first, but then they fill up. And that's a huge money saver for the hospitals. And we are very unique there. So we have a very strong market share of those deals.

And second question related to that. Does the implementation and onboarding process for new clients change when they order multiple modules immediately?

Very often we roll them out one by one because otherwise -- keep it simple is always a good rule and you take one out, but you prepare for the next one and you roll that out later.

And another question from Nikola is, the growth in Secure Communication has been impressive in the last couple of years. Do you see any capacity constraints from your end?

Mainly people. We need engineers in order to deliver and develop new things. So we are hiring people, but we also have very high demands. We hire typically 1 out of 200 to 300 asking for a job with us. We like people to be very smart, and that can provide future benefits for customers as well. So the main constraint is actually finding the good people we want.

And a follow-up on this is, you have decided to retrofit around 4,500 square meters of workspace according to a news article. Will this change your capacity and ability to deliver on Secure Communication projects when the retrofit is finished?

Well, people need space. And especially in communications, we cannot work from home. The security level is too high. And so they need to be in the office 5 days a week, 7 or 8 hours a day. Then, of course, you need space. So a condition for being able to increase the number of staff is that we have room for them, and that is what we do.

Thank you. Then I will move over to questions in the chat function. And the first one is from Jakob Lembke at SEB. Can you comment on what drove the strong increase in Imaging IT recurring revenues quarter-on-quarter? For example, implementation of any particular customer contract or any regions?

I would -- I cannot comment on any particular customers, but what I can say is that increased usage and new sites. So it's both volume on existing customers and adding new customers that drive the recurring revenue growth.

And I will continue with 2 questions more from Jakob Lembke. We now have 2 straight quarters with strong recurring revenue development. Is this a factor of that you have increased efficiency when implementing? Should it be viewed as a new normal?

I'll take it. We are learning, of course, and deploying, as I said before. High priority now is to increase the speed of going from one of those large orders to getting paid for it. And that means people need to use it, and we spend a lot of effort, especially in Imaging IT to be able to deploy faster and be very effective in deploying the system. So we are increasing the speed of this.

And I can also comment that we have -- I mean, we still have the seasonal pattern going forward that we've had. It's maybe becoming less of the seasonal variations and they will become less over time, but we still have them. There is less activity in the summer months than the rest of the year.

And the next question is around order intake. Could you highlight any significant orders that contributed to the strong figure in the quarter?

Mainly from North America and large hospital chains and systems that we very often, unfortunately, we're not allowed to disclose who they are. We can only disclose the order values.

Thank you. And then I will go back to questions I've received via e-mail, and these are from Kristofer Liljeberg at DNB Carnegie. And the first one is, how much of U.S. orders this quarter was included in the picture showed at the Capital Markets Day, about SEK 90 million annual contracted imaging exams per year?

I don't have the answer to that right away. Sorry.

That's fine. We can get back to you on that afterwards. What is the annual numbers of exams for orders signed in K4?

I don't know, to be frank. If you sum the press releases up, it will be disclosed there, but I don't have that out off the top of my head.

And a third question is, I noticed external costs increased again sequentially in K4 after having been flat recent quarters. Will you have to increase that further next 12 months to onboard new customers? Or do you have the resource needed now in the U.S.?

We -- given the -- I mean, the order backlog, we will continue hiring. We always see an increase in the last quarter. We also have on the personnel cost side, we carry costs for the incentive programs that we run. And with the share price going up, the cost is also increasing for those. That can have a substantial impact on the quarterly numbers.

I can also add that this is an issue we'd like to address by noting that separately, that if the stock value goes up, of course, incentive programs has to be -- it's the cost involved with that first on the salary line, but we need in the future to disclose that separately, still part of EBIT and still part of cost, but we wanted to be very clear about what cost is associated with [indiscernible] stop changing because that's not operational.

Yes. And next question from Kristofer is, possible to highlight which contract is driving the sequential increase of cloud recurring revenues with medical IT?

Many, and many quite large. But as again, since we are not allowed to disclose the name of the customer.

And then I have another question from Kristofer. Why is other items positive this quarter? Was there no negative impact from FX revaluation of balance sheet items?

Other items, which line -- I'm not sure which line you're referring to. I can -- other items. I would need to take a look at the report before I can comment on that.

And before you do that, we can take another question from Jakob Lembke. On personnel hiring, should we continue to expect around 10% personnel growth per year? Or will it go down as you increasingly become a bigger company?

I would not say you should expect us to hire at a certain percentage. It goes up and down. With the large orders we have now, especially the very complex ones, we need to hire people, but we need to hire people ways before they actually begin to pay. So it's a cost part before we go live. It will vary. And long term, of course, that percentage needs to go down. Otherwise, we're not using our strength as large -- for becoming larger. Efficiency has to go up with the bigger size we get. And again, when we begin getting the recurring revenue from the very large order that we haven't -- orders that we haven't seen yet, that will, of course, look much better because that drives revenue. It does not drive cost, the cost is already taken.

Yes. Thank you.

Could you please repeat?

Yes, I will repeat. Why is other items positive this quarter? Was there no negative impact from FX revaluation of balance sheet items?

There is no other items line. Maybe if you're referring to other operating income, that's because we have -- we are forwarding cost to the landlord for the office that we are rebuilding. And that impacts the other operating income line. If that is what the question refers to, I am not sure.

Kristofer, you're perfectly all right calling us and explain the question a little further.

Yes. And I'll just check my e-mail, but I can't see any more questions in the chat function.

I can just comment one more thing then. When it comes to the exchange rate loss, yes, of course, we have that relating to revaluation of balance sheet items, but that will hit the financial items lined in the P&L.

Thank you, Jessica. And with that, we have no further questions.

All right. Then we thank you for your attendance and look forward to see you in September and wish you all a good summer. Thank you.

Thank you.